SBA loan basics
Short answer
If the business real estate is owned by a separate entity (e.g., a holding company), that entity will typically need to be included as a co-borrower or provide a guaranty to the SBA loan, and the property used as collateral.
For SBA loans involving real estate, the property must be owned by the operating company or an eligible 'Eligible Passive Company' (EPC) that leases the property to the operating company. The EPC, if separate, would be a co-borrower and also required to guarantee the loan.
A business owner has a separate LLC that owns the building where their main operating company (the borrower) operates. For the SBA loan, the real estate holding LLC would likely need to become a co-borrower, and the property would secure the loan.
13 CFR Part 120 — Business Loans
Office of the Federal Register · Federal regulation
7(a) Loan Program — Terms, Conditions, and Eligibility
U.S. Small Business Administration · Official SBA source
SOP 50 10 - Lender and Development Company Loan Programs
Last checked 2026-06-13. Official sources control — verify before relying on any rule for a live deal.
Last reviewed 2026-06-13 · SBA sources checked through 2026-06-13. DealRoom analysis of public SBA 7(a) lending records (FY2020–present). Grounded in the current SBA rulebook; verify against the official sources above before relying on it for a live deal. Not legal, tax, or financial advice, and not an approval decision.
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